In response to a spiraling scandal that drew fire even from fellow Democrats, leaders of the Florida Democratic Party (FDP) announced on July 8th that they would return $780,000 in federal loan money from the Paycheck Protection Program (PPP). That cash was intended to help small businesses keep their employees during the coronavirus pandemic, but so many unqualified organizations, including FDP, took advantage of the program that its funding – $350 billion – was depleted before many small businesses with legitimate needs could apply.
The fallout has been swift and painful for the FDP. Internal deliberations over what to do with the cash spilled into public view, while many Democrats privately criticized party officials for not being more transparent about how the loan was obtained, and what was done to fix the problem. The FDP’s July 8th announcement came more than a month after the SBA warned “unqualified borrowers” they had until May 14th to take advantage of a “safe harbor” deadline to return the cash.
So far, the only public evidence that FDP can point to are five federal campaign finance records listed as “loan repayments.” But the same records also indicate that the cash wasn’t returned to the bank that originated the PPP loan.
Federal campaign finance records indicate that since at least mid-2017, the Florida Democratic Executive Committee does almost all of its banking through First Bank Merchant Services, based in Georgia. But on July 15th, the Florida Democratic Party sent five payments, not to their own bank, but to Hancock Whitney Bank, based in Mississippi, totaling $781,755, with each of the transactions labeled “loan repayment.” Yet the originating bank, that is, the financial corporation that processed the loan application and provided the cash, was listed as Newtek Financial Services, an entirely separate entity. The FDP doesn’t appear to have any prior banking relationship with Hancock Whitney.
So why would they repay a loan through Hancock Whitney Bank, when the loan came from Newtek?
Top Democrat officials with knowledge of the matter aren’t talking, but state campaign finance records shed some additional light: Hancock Whitney Bank is where the Florida Democratic Legislative Campaign Committee (FDLCC) does its banking. That’s the same committee now being targeted by Republicans for using PPP funds to run their legislative campaigns in House and Senate districts in key races across the state.
Another possible explanation lies eight hundred miles north, in Columbus, Ohio. There, the Ohio Democratic Party’s own PPP scandal, and how they dealt with it, may hold clues about what happened with the cash in Florida. Around the same time time that Florida Democrats were finding a way to skirt SBA rules in order to qualify for the loan, Ohio Democrats were doing the same thing. And when Ohio’s Democratic Party got caught, as with Florida, they, too, promised to return the cash.
Except, according to the Cleveland Plain Dealer, they didn’t:
After facing criticism for accepting a $333,876 forgivable loan from the federal Paycheck Protection Program, the Ohio Democratic Party on Thursday announced it will be converted to a private loan from its financial institution on Aug. 1 under repayment terms both parties agreed to.
In other words, Ohio Democrats found a way to game the system to fill their campaign coffers. In Ohio, the reaction was swift. Republicans blasted the move, and one Ohio state legislator introduced a bill requiring political organizations who took federal PPP money to return it.
Did Florida Democrats pull a similar scheme?
Twice over the past eight days, The Capitolist emailed questions to the FDP through party spokesperson Francis Swanson, including specific questions asking if FDP negotiated with their bank to convert the PPP funds into a new kind of loan. Swanson has not responded.
But the timeline fits. The claimed “loan repayment” as previously noted, was actually five, all sent on July 15th to Hancock Whitney Bank, in transaction sizes similar to how the money was first transferred into the FDP’s executive committee:
The same day, the Florida Democratic Party Executive Committee paid 243 employees a total of $511,440. Then, just six days later, the Florida Democratic Legislative Campaign Committee (FDLCC) collected a transfer of $350,000 from the Florida Democratic Party. The following day, another transfer came to the FDLCC from FDP, this time of $50,000, for a total of $400,000, all sent to the same bank that FDP sent the ill-gotten PPP loan repayment cash. The following week, FDP paid another $826,428 in payroll to its employees.
Where did all that cash come from? If they did manage to “convert” the PPP loan into cash of a different kind, it raises all sorts of new questions, not the least of which is whether or not the PPP funds were used as collateral, or leverage. Were the funds ever actually returned to the Small Business Administration?
If the FDP wasn’t straight with its public statements about the ultimate disposition of the loan, it would mark the third scandal related to the PPP loan program. The first scandal centers on the facts related to how Democrats conspired to get the loan in the first place. Those questions remain unanswered. The second scandal is the question of how Democrats moved the money from a corporation, which is prohibited from giving to a federal campaign committee, to the Florida Democratic Party’s (federal) executive committee.
Whatever the facts, Democrats aren’t talking, and appear unlikely to disclose the facts unless they’re compelled to do so.